Transport infrastructure
Transportation infrastructure is one of the main sectors that attracts foreign direct investment (FDI) in Colombia and the main development driver for economic recovery after COVID-19. In 2019, it accounted for 8.6% of total FDI, and public investment as a percentage of the GDP experienced sustained growth from 0.6% in 2003 to 3% in 2018. An infrastructure investment plan of USD 5.868 billion has been designed to mitigate the pandemic’s economic impact through the PPP approach, with 12 projects that will create 90,000 jobs between 2020 and 2022.
Why invest in Colombia’s transportation infrastructure sector?
National trends in both public and private investment in infrastructure
Infrastructure is the government’s bet on Colombia’s economic development. Public investment increased from 0.6% of the GDP in 2003 to 3% in 2018, and accounted for 8.6% of total FDI in 2019.
The role of infrastructure in economic recovery after the COVID-19 pandemic
For the economic recovery after the public health emergency, the Colombian government has prioritized investments in PPPs worth USD 5.868 billion, which will create over 90,000 jobs between 2020 and 2022.
Efficiency in public-private interaction for the development of infrastructure projects in Colombia
Public Private Partnerships (PPP) have been the main vehicle for infrastructure development in Colombia since 2012 (Law 1508 of 2012). According to the World Bank’s “Procuring Infrastructure Public -Private Partnerships Report 2018”[1], which measures the capabilities of 135 countries to develop projects under the PPP system, Colombia comes in third place globally, after the United Kingdom, and Australia. In addition to this index, Colombia ranked second after Chile in the 2019 Infrascope[2], which measures the enabling environment for PPPs in Latin America and the Caribbean.
Low-risk mechanisms in the infrastructure sector for investment in projects already underway
Colombia has a dynamic infrastructure secondaries market with fully built projects or projects that are currently underway with income generated by partial or complete operations. The possibility of acquiring these projects enables Foreign Equity Investment Funds to participate in projects already underway with steady and guaranteed returns.
Assessment of the 4G program and new outlook of the 5G infrastructure program
Road infrastructure development falls within the 4G and 5G programs. There are currently 22 projects in operation and six in the reactivation process seeking financing within the 4G program. In 2020, the Colombian government launched the fifth generation of concessions (5G)[3] with a strong emphasis on the technical, environmental, and social sustainability of the projects. Upcoming calls for tender include projects such as Accesos Norte (USD 391 million), Troncal del Magdalena (USD 1.216 billion), and Malla Vial del Valle del Cauca (USD 362.6 million).
Investment opportunities for the transportation infrastructure sector:
Up until 2035, Colombia will offer investment opportunities in road infrastructure (worth approximately USD 60 billion), airport expansion projects (USD 5.7 billion), railway infrastructure rehab (USD 3.4 billion), riverine infrastructure (USD 1.6 billion), and port infrastructure (USD 433 million).
[1] https://ppp.worldbank.org/public-private-partnership/library/procuring-infrastructure-ppps-2018
[2] https://infrascope.eiu.com/wp-content/uploads/2019/04/EIU_2019-IDB-Infrascope-Report_FINAL_ESP.pdf
[3] https://www.ani.gov.co/los-proyectos-de-quinta-generacion-5g-tendran-como-eje-central-la-sostenibilidad-y-los-temas